IDBI Bank to sell up to 49% in two subsidiaries, retain controlling stake

IDBI Bank will sell up to 49 per cent stake in its subsidiaries - IDBI Capital Markets and Securities Ltd (ICMS) and IDBI Intech Ltd (IIL), while retaining controlling stake in the two.

The board of directors of IDBI Bank has given in-principle approval to divest or dilute IDBI Bank's stake in the two subsidiaries to prospective investors, the private sector lender said in a regulatory filing.
Shares of IDBI Bank closed at Rs 33.50 on the BSE, down by 1.90 per cent from the previous close.
IDBI Bank is looking to raise Rs1,500 crore from asset sales this financial year, with a major portion from the divestment of its stake in a life insurance joint venture.
“We will raise Rs1,500 crore from asset sales such as life insurance and some other assets,” an Economic Times report cited IDBI Bank CEO Rakesh Sharma as saying.
The bank expects the proceeds from the asset sales, along with recoveries from corporate accounts undergoing insolvency resolution at the National Company Law Tribunal (NCLT), would help the bank turn profitable after 12 successive quarters of losses.
“We expect recoveries from NCLT cases to flow in before this fiscal year ends. Essar Steel’s resolution itself will lead to a recovery of Rs2,200 crore,” The Economic times quoted Sharma as saying. The bad loans had already been provisioned for and the recoveries would boost the bottom line, according to Sharma.
“We should be in the black by end of this fiscal year,” he said.
IDBI Bank has a 48 per cent stake in a life insurance joint venture with Federal Bank and Belgian insurer Ageas, which it has put on the block. The bank holds a minor stake in the National Stock Exchange of India and recently concluded a deal to sell its mutual fund business.
The government appointed Sharma in October 2018 to manage the transition of the bank’s ownership to Life Insurance Corporation of India. The Reserve Bank of India had placed IDBI Bank under prompt corrective action, curbing its lending to companies.
“We have formally requested the Reserve Bank of India to take us out of PCA,” Sharma was quoted as saying. He emphasised that the management was working on a turnaround plan that would rebalance the portfolio of the lossmaking lender, the report added.
IDBI Bank has roughly Rs1,70,000 crore of advances, with a retail lending portfolio of about Rs90,000 crore.
The bulk of the lending is in home loans and loans against property. Its deposit base is pegged at over Rs2,00,000 crore.
LIC has infused Rs9,300 crore of capital to revive the troubled lender.